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Gold Flirts with $1300.00 Again

Gold Flirts with $1300.00 Again

Commentary for Wednesday, May 15, 2019 – Gold closed up $1.60 today at $1296.30 in another round of choppy trading. This pricing pattern should be familiar by now – gold sold off in early trading – moved higher after the sell-off and finally settled around unchanged – trading range – about $8.00.

Can’t say the physical market is hot but the paper trade should get your attention. Look at the 30 day pricing chart for gold. Since the middle of April gold has churned between $1270.00 and $1285.00 but has been surprisingly active to the upside since the beginning of May. And within the last week we have broken above the $1285.00 level and moved nicely towards $1300.00.

I think this latest bullish activity is the result of increased safe-haven demand and the State Department today issued orders that non-essential staff should leave Iran and US citizens should avoid public places. This is a bit on the ominous side and could signal another escalation between Iran and the US which creates more Middle East tension.

Gold has remained firm since Monday – at the same time the Dollar Index has moved higher by around a half point – this is a plus for gold which typically will fade under a rising dollar.

So it’s plain that gold has put in a short term bottom around $1270.00 and has created some upside momentum even though the stock market is coming back into focus.

I would not get too excited here unless gold moves above $1320.00 but keep in mind it is a semi-big deal that we are once again dealing with $1300.00. This at a time when not too long ago technical traders were wondering if gold would break down at $1270.00.

Gold has been holding at or above about $1270.00 since the beginning of 2019 and at one time during this interval moved to short-term highs at $1340.00. This would suggest there is some fuel in this upward price leg as gold once again fights its way back to $1300.00 in a world which offers up enough worry to encourage physical buyers.

This current market mood creates enough buzz to keep the rank and file engaged but not enough excitement to attract fresh money. Keep in mind however that there is a ton of paper currency sitting on the sidelines if the dollar moves south.       

This from Zaner (Chicago) – “Gold was moderately higher overnight, as the trade consolidated Monday’s gains. The market has staged a remarkable recovery since the US/China trade agreement started showing signs of failure early last week, and given that the situation is still tenuous, it may have more upside left. One could argue that the 3-month correction has run its course and that gold is poised to resume the uptrend that began with the August 2018 low. The market seems to be ready to respond positively to elevated risk concerns, whether they come from trade disputes or from saber-rattling in the Middle East. That’s not to say that the market won’t calm down for a while. We may have reached a temporary peak in bellicose talk between the US and China with Monday’s “retaliatory tariffs” by China. Still, the major trade issues have not been resolved, and the chances of them flaring up again at some point look strong. Increasing tensions between the US and Iran may continue to underpin gold. A drone attack on two Saudi Aramco pumping stations on Tuesday caused a major pipeline to be shut down. This come on top of reports Monday that 4 tankers off the UAE coast (2 of them Saudi) were hit by sabotage. The dollar has followed through on its bounce yesterday to trade to its highest level in almost a week, and yet gold gave back less than half of Monday’s gains. July silver was higher overnight, but it has yet to make a technical breakout the way gold has.

Platinum and palladium benefited from the boost in risk sentiment on Tuesday, but they were down overnight as the trade seemed to reassess the risk associated with the US/China trade standoff. Friday’s breakdown in the trade talks has raised concerns about automotive sales and PGM consumption. In general, the trade is looking to stronger PGM consumption in the coming years as China tries to tackle its air pollution problems. Some traders are optimistic that the effects of “dieselgate” have finally been absorbed by the platinum market, and that demand for platinum by the automotive sector (especially for trucks) is set to grow again. There have been some forecasts for tightening platinum supply in 2019, but they have not been consistent. One analytics firm sees the surplus moving to a deficit, another sees a smaller surplus, and another sees the surplus growing. There was a comment out of Platinum Week which claimed that South African mine owners were bracing for a fresh round of negotiations with unions in the wake of stronger producer profits. July platinum may be attempting to build a base between $850 and $885. Key support comes in at $847.10 and $838.50, with resistance at $869.50 and $881.00. Key support for June palladium is at $1,290.8 and $1,256.50 with resistance at $1,355.20 and $1,404.00. June gold broke out above major trendline resistance on Monday, and that line becomes key support at $1291.40 on Wednesday. A close back above the 0.382 retracement of the February-May decline ($1,301) would support the bullish case. Look for support in July silver at $14.615 and $14.57, with resistance at $14.90 and $15.00.”

Silver closed unchanged at $14.75. Could there be some disappointment creeping back into the silver crowd because pricing is drifting lower? This is a joke – silver bullion has to be the best dollar play in the precious metals today. Discounted heavily – now is the time to build up your reserves – you will look like a genius when silver is trading at twice this level and folks are still lining up to buy more!

Platinum closed down $11.50 at $845.00 and palladium closed down $0.10 at $1337.60.

This is our usual ETF information – Gold Exchange Traded Funds: Total as of (5/8/2019) was 67,713,036. That number this week (5/15/2019) was 67,640,895 ounces so we dropped 462,617 ounces of gold.

The all-time record high for all gold ETF’s was 85,108,867 ounces in 2013. The record high for Gold ETF’s in 2019 was 70,515,544 and the record low for 2019 was 67,478,110.

Silver Exchange Traded Funds: Total as of (5/8/2019) was 616,192,547. That number this week (5/15/2019) was 616,186,068 ounces so we dropped 6,479 ounces of silver.

Platinum Exchange Traded Funds: Total as of (5/8/2019) was 2,792,350. That number this week (5/15/2019) was 2,771,728 ounces so we dropped 20,622 ounces of platinum.

Palladium Exchange Traded Funds: Total as of (5/8/2019) was 716,424. That number this week (5/15/2019) was 694,306 ounces so we dropped 22,118 ounces of palladium.

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